U.S. credit card issuers pare lending limits

[Joanne98]

NEW YORK (Reuters) - Millions of Americans have already seen their credit card limits shrink, and millions more face the same fate as lenders prepare for tougher U.S. consumer protection rules.

Since the financial crisis deepened a year ago, credit card companies have been closing millions of inactive accounts, cutting credit limits and raising interest rates to cushion themselves from record loan losses.

This is just the beginning of the biggest shake-up in the credit card industry in at least 20 years, analysts said.

Credit Suisse analyst Moshe Orenbuch estimated available credit card lines will be cut by about 20 percent, or $1.2 trillion, in coming months, and warned that "further cuts could result from the provisions of the new credit card law."

Meredith Whitney, one of Wall Street's best known and most bearish bank analysts, forecast that unused credit card lines will be cut by $2.7 trillion, or around 50 percent, by the end of 2010.

"Much of the credit line reduction to date has been driven by inactive account elimination, and I think in some respect you are seeing now a contraction in credit lines to individuals that are active," said Sanjay Sakhrani, an analyst at KBW.

Going forward, credit card companies will purge customers rather than risk higher losses. Sakhrani said customers likely to be cut off are subprime borrowers with weak credit and those who switch lenders, lured by "teaser" rates.
http://www.reuters.com/article/ousiv/idUSTRE57R3AM20090828

[dixiegrrrrl]

1. They are weeding out the deadwood, poor credit risk but

raising rates on people who owe them money.
I hope a lot of people cut up all but one card. We have.